STEEPLY rising house prices could begin to slow down if they get too far out of reach of first-time buyers, an economist has predicted.

Andrew Wilson, deputy group chief economist with the Royal Bank of Scotland, told Kent business people that in a normal market house prices ought to rise in line with inflation.

But a mismatch between supply and demand, fuelled by an increasing number of single householders, had sparked average annual rises of 10 per cent over the past decade, way above average inflation of five per cent.

Typical first-time buyers were now in their 30s because younger people could not afford a home. Mr Wilson said that this fact suggested the market should ultimately slow.

He said: "We see in the longer term that house price rises should slow up.

"I don’t think they will correct because there are too many people seeking a house. But they should slow up toward five per cent."

Mr Wilson added that high house prices underlined a transfer of wealth from the younger generation to the older, something that was unusual in economic history.

"It’s going to be a pretty tough situation for the next generation of housebuyers," he added.